AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit 10.2
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) executed on December 29, 2008
and effective for all purposes as of January 14, 2008 (the “Effective Date”), is entered into by
and between CONSOLIDATED GRAPHICS, INC., a Texas corporation having its principal place of business
in Houston, Xxxxxx County, Texas (“CGX”), and XXX X. XXXX (the “Executive”); other capitalized
terms used in this Agreement are defined and shall have the meanings set forth in
Section 17 or elsewhere herein.
W I T N E S S E T H:
WHEREAS, Executive is employed as Executive Vice President and Chief Financial and Accounting
Officer of CGX, and has been or will be appointed to such other offices as may be deemed
appropriate by the Board of Directors of CGX, including Treasurer and Secretary of CGX, and as an
officer of its subsidiaries;
WHEREAS, in connection with his employment, Executive has been or will be provided by CGX with
specialized training and given access to confidential information with respect to CGX, its
Affiliates and their Customers;
WHEREAS, CGX and Executive are parties to that certain Employment Agreement, effective as of
January 14, 2008 (the “Prior Employment Agreement”); and
WHEREAS, the Company and the Executive desire to amend and restate the Prior Employment
Agreement solely to incorporate such terms as are deemed necessary by the parties to comply with
Section 409A of the Internal Revenue Code, as amended, and the regulations issued thereunder, and
to make certain ministerial clarifications;
NOW, THEREFORE, in consideration of the premises, representations and mutual covenants
hereinafter set forth, the parties hereby covenant and agree as follows:
1. Employment. Subject to and conditioned upon the express terms set forth in
Xxxxxxx 00, XXX hereby employs Executive, and Executive hereby accepts employment with CGX, on the
terms and conditions set forth in this Agreement.
2. Employment Period. The term of Executive’s employment (the “Employment Period”)
pursuant to the terms of this Agreement shall commence upon the Effective Date and shall continue
until August 31, 2013, unless earlier terminated in accordance with Section 15(a) below.
3. Duties. Executive shall (i) serve under the direction of the Board and the Chief
Executive Officer of CGX (the “CEO”) as the Executive Vice President and Chief Financial and
Accounting Officer of CGX, and will be appointed to such other offices as may be deemed appropriate
by the Board of Directors of CGX, including Treasurer and Secretary of CGX, and as an officer of
its subsidiaries; (ii) have all the rights, powers and duties associated with his positions; and
(iii) faithfully, to the best of Executive’s ability, perform the duties and other reasonably
related services assigned to Executive by the Board and/or CEO from time to time
(the ”Duties”).
Executive shall be subject to, and shall comply with, CGX xxxxxxx xxxxxxx
policies (a copy of which has been delivered to Executive) and the other policies of CGX in effect
from time to time (collectively, the “CGX
Policies”);
provided, however, that to the extent such
CGX Policies may contradict the express provisions of this Agreement, the provisions of this
Agreement shall govern. Executive shall devote his full business time, efforts and attention to
the business of CGX during the Employment Period consistent with past practice and, without the
prior written consent of the Board, Executive shall not during the Employment Period render any
services of a business, commercial or professional nature, to any person or organization other than
CGX and the Affiliates or be engaged in any other business activity, other than those activities
described in Section 12 below. Executive represents and warrants that Executive is not a
party to or bound by any agreement or contract or subject to any restrictions, including without
limitation in connection with any previous employment, which might prevent Executive from entering
into and performing Executive’s obligations under this Agreement.
4. Compensation. During the Employment Period, Executive shall be compensated for
Executive’s services as follows:
(a) Executive shall be paid a base monthly salary of not less than $20,833.33, subject
to any and all customary payroll deductions, including deductions for the Federal Insurance
Contributions Act and other federal, state and local taxes.
(b) Except to the extent such policies may contradict the express provisions of this
Agreement, in which case the provisions of this Agreement shall govern, Executive shall be
eligible to receive fringe benefits on the same basis as other management employees of CGX
pursuant to CGX Policies in effect from time to time, including holiday time and paid
vacation; provided, however, that earned but unused vacation or other compensated absences
shall not be carried forward for use or payment in subsequent periods.
(c) Executive shall be eligible to participate, to the extent that Executive meets all
eligibility requirements of general application, in each of the employee benefit plans
maintained by CGX or in which employees of CGX generally are eligible to participate,
including as of the date hereof, group hospitalization, medical, dental, and short and long
term disability and life plans.
5. Bonus. In addition to the other compensation set forth herein, Executive may
receive an annual cash bonus payment in an amount to be determined in the sole discretion of the
CEO and approved by the Board or the Compensation Committee of the Board. Any such bonus shall be
paid in accordance with CGX’s customary practice, subject to all customary payroll deductions,
including deductions for the Federal Insurance Contributions Act and other federal, state and local
taxes.
6. Stock Options. In addition to the other compensation set forth herein, Executive
has previously been provided with an option to purchase 50,000 shares of CGX common stock pursuant
to the terms of the Prior Employment Agreement.
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7. Executive Expenses. During the Employment Period, Executive shall be entitled to
be reimbursed for reasonable normal business expenses directly incurred in the performance of the
Duties hereunder and in accordance with CGX Policies in effect from time to time; provided,
however, that documentation supporting such expenses must be submitted to and approved by the CEO
or the Board before such reimbursement is paid to Executive.
8. No Competing Business. In consideration for the benefits received by Executive
pursuant to this Agreement, during the Noncompetition Period, Executive shall not, except as
permitted by Section 12 of this Agreement, directly or indirectly own, manage, operate,
control, invest or acquire an interest in, or otherwise engage or participate (whether as a
proprietor, partner, employee, stockholder, member, director, officer, executive, joint venturer,
investor, consultant, agent, sales representative, broker or other participant) in any Competitive
Business operating in or soliciting business from CGX’s Market, without regard to: (i) whether the
Competitive Business has its office or other business facilities within CGX’s Market; (ii) whether
any of the activities of Executive referred to above occur or are performed within CGX’s Market; or
(iii) whether Executive resides, or reports to an office, within CGX’s Market.
9. No Interference with the Business. In consideration for the benefits received by
Executive pursuant to this Agreement, during the Noncompetition Period, Executive shall not:
(a) directly or indirectly solicit, induce or intentionally influence any third party
sales representative, agent, supplier, lender, lessor or any other person which has a
business relationship with CGX and/or any Affiliate or which had on the date of this
Agreement a business relationship with CGX and/or any Affiliate to discontinue, reduce the
extent of, discourage the development of or otherwise harm such relationship with CGX and/or
any Affiliate;
(b) directly or indirectly (i) attempt to communicate with or solicit business from any
Customer or its representatives for any reason, except on behalf of CGX and/or any
Affiliate, (ii) attempt to induce any known Customer or its representatives to terminate any
contract or otherwise divert from CGX and/or any Affiliate any trade or business being
conducted by any such Customer with CGX and/or any Affiliate or (iii) attempt to solicit,
induce or intentionally influence any prospective or past Customer of CGX and/or any
Affiliate to discontinue, reduce the extent of, or not conduct business with CGX and/or any
Affiliate;
(c) directly or indirectly recruit, solicit, induce or influence any executive,
employee or sales agent of CGX and/or any Affiliate to discontinue such sales, employment or
agency relationship with CGX and/or any such Affiliate;
(d) employ, seek to employ or cause any other person or entity to employ or seek to
employ as a sales representative or Executive any person who is then (or was at any time
since the Effective Date) employed by CGX and/or any of the Affiliates; or
(e) directly or indirectly denigrate or in any manner undertake to discredit CGX, any
Affiliate or any successor thereof or any person, operation or entity associated with CGX or
any Affiliate.
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10. Consideration for Restrictions. Executive acknowledges that the restrictions
imposed under Sections 3, 8, 9, and 11 are supported by the consideration to be received by
Executive pursuant to the terms of this Agreement.
11. No Disclosure of Confidential Information. During Executive’s employment with
CGX, CGX shall provide Executive with certain Confidential Information. Executive shall not,
during the Employment Period or thereafter, directly or indirectly knowingly disclose to anyone or
use or otherwise exploit for Executive’s own benefit or for the benefit of anyone other than CGX
and/or any of the Affiliates any Confidential Information. Upon termination of Executive’s
employment hereunder or at any other time that the CEO so requests, Executive shall promptly
deliver to CGX all materials containing any Confidential Information, and all copies of such
materials and other materials of CGX or any Affiliate which are in Executive’s possession or under
Executive’s control, and Executive shall not make or retain any copies or extracts of such
materials. If a disclosure is required by law or legal process, Executive shall provide CGX with
prompt notice thereof so that CGX may seek an appropriate protective order at its cost or otherwise
waive compliance with the terms of this covenant, and in the event CGX cannot obtain such
protective order or it waives compliance with the terms of this covenant, Executive may disclose
that portion of the Confidential Information that CGX’s legal counsel has advised may be disclosed.
12. Permitted Activities. The restrictions set forth in Sections 3, 8 and 9
of this Agreement shall not apply to Permitted Activities (as defined below).
13. Consideration for Restrictions; Reduction of Restrictions by Court Action.
Executive acknowledges that the restrictions and obligations imposed under Sections 3, 8, 9,
and 11 of this Agreement are supported by: (i) CGX’s agreement to provide Executive with access
to and the right to use its Confidential Information, and the right to develop relationships with
its Executives based upon such Confidential Information; (ii) the consideration and benefits to be
received by Executive pursuant to this Agreement, including issuance of the stock option set forth
in Section 6 above; (iii) the training methodology and proprietary information to be shared
by CGX with Executive pursuant hereto; and (vi) Executive’s continued employment (pursuant to the
terms of this Agreement) and his acknowledgment that compliance with the restrictions and
obligations set forth herein was material in employing the Executive and that such restrictions and
obligations are necessary to protect the business and goodwill of CGX and its Affiliates. If,
however, the length of time, type of activity, geographic area or other restrictions set forth in
the restrictions of Sections 3, 8, 9, or 11 are deemed unreasonable in any court
proceeding, the parties hereto agree that the court may reduce such restrictions to ones it deems
reasonable to protect the substantial investment of CGX and the Affiliates in their businesses and
the goodwill attached thereto.
14. Remedies. Executive understands that CGX and the Affiliates will not have an
adequate remedy at law for the breach or threatened breach by Executive of any one or more of the
covenants set forth in this Agreement and agrees that in the event of any such breach or threatened
breach, CGX or any Affiliate may, in addition to the other remedies which may be available to it,
file a suit in equity to enjoin Executive from the breach or threatened breach of such covenants.
In the event either party commences legal action to enforce its or his rights under this Agreement,
the prevailing party in such action shall be entitled to recover all of the
costs and expenses in connection therewith, including reasonable attorney’s fees. All
covenants and restrictions of Executive contained in this Agreement shall be construed as
agreements independent of any other provision of this Agreement, and the existence of any claim or
cause of action by Executive against CGX or vice versa, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by CGX of such covenants and
restrictions.
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15. Termination.
(a) The “Termination Date” shall mean the date in which the first of the following
occur:
(i) August 31, 2013;
(ii) Executive’s death;
(iii) the Disability (as defined below) of Executive;
(iv) termination by CGX of Executive for Cause (as defined below);
(v) termination by CGX of Executive without Cause;
(vi) the resignation of Executive for any reason (other than Good Reason (as
defined below)), which shall take effect immediately upon CGX’s receipt of such
resignation;
(vii) the resignation of Executive for Good Reason, which shall take effect
immediately upon CGX’s receipt of such resignation; or
(viii) a Change in Control (as defined in the Change in Control Agreement).
(each of subparagraph (i), (ii), (iii), (iv), (v), (vi), (vii) and (viii) are referred to herein as
a “Termination”). Notwithstanding anything in this Section 15(a) to the contrary, in the case of
any payment or benefit provided pursuant to clause (iii), (v) or (vii) that is subject to Section
409A of the Code, “Termination” shall mean Executive’s “separation from service” with CGX within
the meaning of Section 409A(2)(A)(i) of the Code and the corresponding “Termination Date” shall be
the date Executive incurs such separation from service.
(b) If a Termination occurs pursuant to subparagraphs (v), or (vii), then
(i) Executive shall receive, within five business days after the Termination Date, a lump
sum payment equal to Executive’s base monthly salary for one (1) year, determined based on
Executive’s base monthly salary in effect immediately prior to the Termination; and
(ii) during the Severance Period (as defined below), Executive shall continue to receive
and/or be able to elect to receive benefits under CGX welfare plans or substantially
equivalent welfare plans at CGX’s expense, including but not limited to, medical/hospital,
dental, life, and disability, in accordance with the terms of such plans in effect at the
time; provided, however, that Executive shall be responsible for the costs of
such benefits to the same extent he was responsible (or would have been responsible had
he then been a participant) for such costs prior to the Termination Date.
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(c) If a Termination occurs pursuant to subparagraphs (i), (ii), (iii), (iv), (vi) or
(viii), then Executive or Executive’s estate shall receive: (i) Executive’s monthly salary
in effect immediately prior to the Termination in accordance with Section 4(a)
through the date of such Termination; and (ii) any other amounts earned, accrued or owing as
of such Termination Date, but not yet paid by CGX to Executive.
(d) Termination of employment hereunder shall not relieve Executive of his obligations
under Sections 8 and 9 hereof, notwithstanding the termination of Executive’s
compensation or the termination of the other terms and conditions of this Agreement. In
addition, termination of employment hereunder shall not relieve Executive of his obligations
under Section 11 hereof which are intended to continue indefinitely, notwithstanding
the termination of Executive’s compensation or the termination of the other terms and
conditions of this Agreement. Executive’s violation of any of his obligations under
Sections 8, 9 or 11 hereof shall relieve CGX of its obligation to pay any of the
benefits as contemplated in this Section 15.
(e) In addition to all other compensation due to Executive hereunder, the following
shall occur immediately prior to the occurrence of a Termination pursuant to
subparagraphs (ii), (iii) or (vii) of Section 15:
(i) all CGX stock options held by Executive prior to such a Termination shall
become exercisable, regardless of whether or not the vesting/performance conditions
set forth in the relevant agreements shall have been satisfied in full;
(ii) all restrictions on any restricted securities granted by CGX to Executive
prior to such a Termination shall be removed and the securities shall become fully
vested and freely transferable, regardless of whether the vesting/performance
conditions set forth in the relevant agreements shall have been satisfied in full;
(iii) Executive (or Executive’s estate) shall have an immediate right to
receive all performance shares or bonuses granted prior to such a Termination, and
such performance shares and bonuses shall become fully vested and freely
transferable or payable without restrictions, regardless of whether or not specific
performance goals set forth in the relevant agreements shall have been attained;
(iv) all performance units granted to Executive prior to such a Termination
shall become immediately payable in cash or common stock, at Executive’s sole option
(or at the sole option of the executor of the Executive’s estate), regardless of
whether or not the relevant performance cycle has been completed, and regardless of
whether any other terms and conditions of the relevant agreements shall have been
satisfied in full; and
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(v) provided, that if the terms of any plan or agreement providing for such
options, restricted securities, performance shares or bonuses, performance units or
equity based grants do not allow such acceleration or payment as described above,
CGX shall take or cause to be taken any action required to allow such acceleration
or payment or to separately pay the value of such benefits.
(f) Notwithstanding any provision of this Agreement to the contrary, if Executive
incurs a separation from service with CGX (other than by reason of death) and is deemed on
his date of separation from service to be a “specified employee” within the meaning of
Section 409A(a)(2)(B)(i) of the Code, then, to the extent required under Section
409A(a)(2)(B)(i) of the Code, the payments and benefits under this Agreement shall commence
or be made or provided as soon as practicable but not prior to the later of (A) the payment
date set forth in this Agreement or (B) the date that is the earliest of: (i) the expiration
of the six-month period measured from the date of separation from service; or (ii) the date
of Executive’s death, in either case without interest for such delay.
(g) To the extent any reimbursements or in-kind benefits provided to Executive pursuant
to this Agreement are subject to Section 409A of the Code, including without limitation any
health plan benefits subject to Section 409A of the Code, then in accordance with Section
409A of the Code: (A) the amount of expenses eligible for reimbursement or in-kind benefits
provided during Executive’s taxable year shall not affect the expenses eligible for
reimbursement or in-kind benefits provided in any other taxable year; (B) the reimbursement
must be made on or before the last day of Executive’s taxable year following the taxable
year in which the expense was incurred; and (C) the right to reimbursement or in-kind
benefits is not subject to liquidation or exchange for another benefit.
16. Gross-Up.
(a) Anything in this Agreement to the contrary notwithstanding, in the event a public
accounting firm selected by Executive (the “Accounting Firm”) shall determine that any
payment, benefit, or distribution by CGX to Executive (whether paid or payable or
distributed or distributable pursuant to the terms of Section 15 of this Agreement
or otherwise, but determined without regard to any additional payments required under this
Section 16) (each a “Payment”) is subject to the excise tax imposed by Section 4999
of the Code, or any interest or penalties are incurred by Executive with respect to such
excise tax (such excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the “Excise Tax”), then CGX shall pay to Executive an additional
payment (a “Gross-Up Payment”) in an amount such that after payment by Executive of all
taxes (including any interest or penalties imposed with respect to such taxes), including,
without limitation, any income taxes (and any interest and penalties imposed with respect
thereto), and the Excise Tax imposed upon the Gross-Up Payment, Executive retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
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(b) Subject to the provisions of Section 16(c) below, all determinations
required to be made under this Section 16, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by the Accounting Firm which shall
provide detailed supporting calculations both to CGX and Executive as soon as possible
following a request made by Executive or CGX. All fees and expenses of the Accounting Firm
shall be borne solely by CGX. Any Gross-Up Payment, as determined pursuant to this
Section 16, shall be paid by CGX to Executive within five (5) days of the receipt of
the Accounting Firm’s determination and in no event later than December 31st of the year
following the year during which Executive remits the related taxes. If the Accounting Firm
determines that no Excise Tax is payable by Executive, it shall furnish Executive with a
written opinion that failure to report the Excise Tax on Executive’s applicable federal
income tax return would not result in the imposition of a negligence or similar penalty.
Any determination by the Accounting Firm shall be binding upon CGX and Executive. As a
result of the uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by CGX should have been made (“Underpayment”),
consistent with the calculations required to be made hereunder. If CGX exhausts its
remedies pursuant to Section 16(c) below and Executive thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid by CGX to or
for the benefit of Executive.
(c) Executive shall notify CGX in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by CGX of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than ten (10) business days
after Executive is informed in writing of such claim and shall set forth in reasonable
detail the nature of such claim and the date on which such claim is requested to be paid.
Executive shall not pay such claim prior to the expiration of the ten (10)-day period
following the date on which Executive gives such notice to CGX (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due). If CGX
notifies Executive in writing prior to the expiration of such period that it desires to
contest such claim, Executive shall:
(i) give CGX any information reasonably requested by CGX relating to such
claim,
(ii) take such action in connection with contesting such claim as CGX shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney selected by
CGX,
(iii) cooperate with CGX in good faith to effectively contest such claim, and
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(iv) permit CGX to participate in any proceedings relating to such claim;
provided, however, that CGX shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold Executive harmless, on an after-tax
basis, for any Excise Tax or income tax (including interest and penalties with
respect thereto) imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this
Section 16(c), CGX shall control all proceedings taken in connection with
such contest and, at its sole option, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in respect
of such claim and may, at its sole option, either direct Executive to pay the tax
claimed and xxx for a refund or contest the claim in any permissible manner, and
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as CGX shall determine; provided further, that if CGX directs
Executive to pay such claim and xxx for a refund, CGX shall advance the amount of
such payment to Executive on an interest-free basis and shall indemnify and hold
Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to such
advance or with respect to any imputed income with respect to such advance; and
provided further, that any extension of the statute of limitations relating to
payment of taxes for the taxable year of Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested amount.
Furthermore, CGX’s control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and Executive shall be entitled
to settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(d) If, after the receipt by Executive of an amount advanced by CGX pursuant to this
Section 16, Executive becomes entitled to receive, and receives, any refund with
respect to such claim, Executive shall (subject to CGX’s complying with the requirements of
this Section 16) promptly pay to CGX the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the receipt by
Executive of any amount advanced by CGX pursuant to Section 16, a determination is
made that Executive shall not be entitled to any refund with respect to such claim and CGX
does not notify Executive in writing of its intent to contest such denial of refund prior to
the expiration of thirty (30) days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
17. Definitions. As used in this Agreement, terms defined in the preamble and
recitals of or elsewhere in this Agreement shall have the meanings set forth therein and the
following terms shall have the meanings set forth below:
(a) Affiliate or Affiliates shall mean and refer to any direct or
indirect subsidiaries of CGX, or any other entity or entities through which CGX or any
subsidiary of CGX may conduct CGX’s Line of Business.
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(b) Cause shall mean and include without limitation: (i) the inability of
Executive to perform his Duties hereunder due to a legal impediment, including without
limitation, the entry against Executive of an injunction, restraining order or other
type of judicial judgment, decree or order which would prevent or hinder Executive from
performing his Duties; (ii) the willful failure by Executive to follow material CGX Policies
or the willful disregard of the reasonable and material instructions of the CEO with respect
to the performance of Executive’s Duties, other than any failure not occurring in bad faith
that is remedied by Executive promptly after receipt of notice thereof from CGX;
(iii) excessive absenteeism, flagrant neglect of work, indictment or conviction of a felony
or fraud; or (iv) the failure of Executive to devote substantially all of his full working
time and attention to performance of his Duties for CGX.
(c) Change in Control Agreement shall mean that certain Change in Control
Agreement, effective as of January 14, 2008, between CGX and Executive.
(d) CGX’s Line of Business shall mean general commercial printing services,
including digital imaging and printing, offset lithography (sheet fed and web), composition,
electronic prepress, flexography, binding, kitting and finishing services, fulfillment of
printed materials, direct mail services, and includes any other products or services
manufactured, developed or distributed, including electronic products and services, at any
time by CGX and/or the Affiliates before or after the Effective Date.
(e) CGX’s Market shall mean the United States and Canada;
(f) Competitive Business shall mean any person or entity engaged in a business
that produces any of the products or performs any of the services comprising CGX’s Line of
Business.
(g) Confidential Information shall mean trade secrets; customer and supplier
lists; marketing arrangements; business plans; projections; financial information; training
manuals; pricing manuals; product and service development plans; market strategies; internal
performance statistics; all information about any Customer, including their facilities,
requirements, purchasing preferences or needs, their past purchasing histories, and all
records relating to transactions or communications of any kind between the Executive and any
Customer; all information about CGX’s employees, including their compensation, resumes,
experience, capabilities, work histories, and performance evaluations; information about
CGX’s consultants, vendors or suppliers; information acquired from CGX’s employees or
inspection of CGX’s property; information disclosed to CGX by third parties, concerning
CGX’s and its Affiliate’s products, services, marketing programs, bids or bidding processes,
staffing specifications, service contracts or servicing schedules or procedures, or business
practices and other competitively sensitive information belonging to and concerning CGX
and/or any of the Affiliates and not generally known by or available to the public, whether
or not in written or tangible form, as the same may exist at any time during the Employment
Period. For purposes hereof, CGX and Executive agree that Confidential Information includes
current, updated and future data, information, reports, evaluations and analyses of CGX, its
financial performance and results, Customers and employees, including their compensation,
performance or evaluation, and includes information, data, reports and evaluations:
(i) provided to Executive before and after the date hereof; (ii) those which the Executive
created, in whole or in part; (iii) those to which or for which Executive provides
input and information; and (iv) those which the Executive uses for the purpose of making
decisions relating to CGX’s business, its Customers or employees.
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(h) Customer shall mean any person or entity with which CGX and/or its
Affiliates has a contract (oral or written) or to which the CGX and/or its Affiliates has
provided goods or services during the term of Executive’s employment with CGX (irrespective
of whether it occurred prior to or after the Effective Date), or to which CGX and/or an
Affiliate has made a bid or proposal to provide goods or services.
(i) Disability shall mean any illness, disability or incapacity of such a
character as to render Executive unable to perform his Duties (which determination shall be
made by the CEO) for a total period of ninety (90) days, whether or not such days are
consecutive, during any consecutive twelve (12) month period.
(j) Effective Date shall mean the effective date set forth in the introductory
paragraph of this Agreement.
(k) Employment Period shall mean that period of time set forth in
Section 2 of this Agreement.
(l) Good Reason shall mean: (i) the material breach of this Agreement by CGX
other than any failure not occurring in bad faith that is remedied by CGX within thirty (30)
days after receipt of notice thereof from Executive; (ii) the implementation by CGX of a
condition to Executive’s continued employment with CGX that Executive’s principal place of
work be changed to any location outside of the Houston metropolitan area; and (iii) a
material diminution in the Executive’s Duties or cash compensation.
(m) Noncompetition Period shall mean a period beginning on the Effective Date
and continuing through the Employment Period and for the period of one (1) year after any
Termination pursuant to Section 15(a)(i), (iii), (iv), (v), (vi) or (vii).
(n) Permitted Activities shall mean: (i) owning not more than 1% of the
outstanding shares of a publicly-held Competitive Business which has shares listed for
trading on a securities exchange registered with the Securities and Exchange Commission or
through the automated quotation system of a registered securities association; (ii) owning
capital stock of CGX; or (iii) those activities or actions undertaken by Executive, to the
extent, but only to the extent, such activities or actions are expressly approved in writing
by the CEO.
(o) Severance Period shall mean that period of time equal to one (1) year
following Termination.
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18. Notices. All notices, demands or other communications required or provided
hereunder shall be in writing and shall be deemed to have been given and received when delivered in
person or transmitted by facsimile transmission (telecopy), cable or telex to the respective
parties (with confirmation of successful transmission) or seven (7) days after dispatch
by registered or certified mail, postage prepaid, addressed to the parties at the addresses
set forth below or at such other addresses as such parties may designate by notice to the other
parties:
| If to CGX: | Consolidated Graphics, Inc. | |||
| 0000 Xxxxxxxxxx, Xxxxx 000 | ||||
| Xxxxxxx, Xxxxx 00000 | ||||
| Attention: Xxx X. Xxxxx | ||||
| with a copy (which shall not | ||||
| constitute notice) to: | Xxxxxxx Xxxxxx-Xxxxxx | |||
| Xxxxxx and Xxxxx LLP | ||||
| 1 Houston Center | ||||
| 0000 XxXxxxxx Xxx, Xxxxx 0000 | ||||
| Xxxxxxx, Xxxxx 00000 | ||||
| If to Executive: | Xxx X. Xxxx | |||
| 0000 Xxxxxxxxxx, Xxxxx 000 |
||||
| Xxxxxxx, Xxxxx 00000 |
19. Assignment. CGX, but not Executive, may assign or delegate any of its rights or
obligations hereunder; provided, further, that an assignment made in accordance with this section
shall not constitute a termination of employment for purposes of this Agreement. This Agreement
shall be binding upon and inure to the benefit of any assignee thereof and any such assignee shall
be deemed substituted for CGX under the terms of this Agreement and all references to “CGX” shall
be deemed to mean such assignee. As used in this Agreement, the term “assignee” shall include any
Affiliate or person, firm, partnership, corporation or CGX which at any time, whether by merger,
purchase or otherwise, acquires all of the capital stock or substantially all of the assets or
business of CGX, and any assignee or successor thereof.
20. No Mitigation Obligation. CGX hereby acknowledges that it will be difficult, and
may be impossible, for Executive to find reasonably comparable employment following the Termination
Date and that the noncompetition covenants contained in Sections 8, 9 and 11 hereof will
further limit the employment opportunities for Executive. Accordingly, the parties hereto
expressly agree that the payment of the severance compensation and benefits by CGX to Executive in
accordance with the terms of this Agreement will be liquidated damages, and that Executive shall
not be required to mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise, nor shall any profits, income, earnings or other benefits from any
source whatsoever create any mitigation, offset, reduction or any other obligation on the part of
Executive hereunder or otherwise, except to the extent Executive receives comparable welfare
benefits from another employer during the Severance Period.
21. Amendment and Modification. No amendment or modification of the terms of this
Agreement shall be binding upon either party unless reduced to writing and signed by Executive and
a duly appointed officer of CGX.
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22. Governing Law. This Agreement and all rights and obligations hereunder, including
matters of construction, validity and performance, shall be governed by the laws of the State of
Texas, without giving effect to the principles of conflicts of laws thereof.
23. Counterparts. This Agreement may be executed in two or more counterparts, any one
of which shall be deemed the original without reference to the others.
24. Severability. If any provision or portion of this Agreement shall be determined
to be invalid or unenforceable for any reason, the remaining provisions and portions of this
Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest
extent permitted by law.
25. Waiver. The failure of either party to insist, in any one or more instances, upon
performance of the terms or conditions of this Agreement shall not be construed as a waiver or
relinquishment of any right granted hereunder or of the future performance of any such term,
covenant or condition.
26. Construction of Agreement. Headings of the sections in this Agreement are for
reference purposes only and shall not be deemed to have any substantive effect. Unless the
contents of this Agreement otherwise clearly requires, references to the plural include the
singular and the singular include the plural. Whenever the context here requires, the masculine
shall refer to the feminine, the neuter shall refer to the masculine or feminine, the singular
shall refer to the plural, and vice versa.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
written above.
| EXECUTIVE: | ||||||
| /s/ XXX X. XXXX | ||||||
| XXX X. XXXX | ||||||
| CGX: | ||||||
| CONSOLIDATED GRAPHICS, INC. | ||||||
| By: | /s/ Xxx X. Xxxxx |
|||||
| Chairman and Chief Executive Officer | ||||||
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